WASHINGTON — The economy sent strongly mixed signals Tuesday, with sales of new homes soaring in September to the highest level in six months, but consumer confidence falling sharply in October to its lowest point in a year.

Meanwhile, a measure of Midwest manufacturing recorded its biggest drop in two decades.

Americans purchased new single-family homes at a seasonally adjusted annual rate of 946,000 in September, the highest level since a rate of 947,000 homes in March, the Commerce Department said Tuesday.

The 9.2 percent increase, the largest since an 11 percent rise in July, came as many analysts expected a drop in the frequently volatile sector.

"To pick out a single factor, I think it would be mortgage rates," said Michael Carliner, economist at the National Association of Home Builders. "We still have a lot of people that have a lot in increases in wealth and feel confident about the future."

Separately, the New York-based Conference Board said its consumer confidence index fell to 135.2 in October, a steep drop from the revised 142.5 reported in September and the record high of 144.7 in May and January.

The drop is a potentially worrisome sign for the approaching holiday retail season.

The Conference Board index, based on a monthly survey of some 5,000 U.S. households, is closely watched because consumer spending accounts for about two-thirds of the nation's economic activity.

In a third report, the Purchasing Management Association of Chicago said its index of area economic activity in October fell to 48.7 from 51.4 in September.

The drop was the sharpest since May 1980, putting the index at the lowest level in 21 months. A reading above 50 generally indicates expansion, while one below 50 usually means contraction.

The employment component of the barometer rose to 42.1 from 41.5 in September.

The report is closely watched as a possible barometer of national manufacturing activity, due to be reported Wednesday.

In the housing report, new-home sales fell 5.8 percent in August, according to revised figures, a weaker performance than the 3 percent drop the government reported one month ago.

In September, mortgage rates continued to creep down as the moderating economy reduced pressure on long-term interest rates. The average interest rate on a fixed-rate 30-year mortgage was 7.91 percent last month, down from 8.03 percent in August but higher than the 7.82 percent rate in September 1999.

Sales were up in all parts of the country except the Northeast. In the Midwest, sales rose a whopping 17.3 percent, to an annual rate of 190,000, the highest level since October 1999.

The national median sales price, the midpoint where half the homes sold for more and half for less, increased by 2 percent in September to $165,200.

The supply of unsold homes fell from 4.3 months in August to 3.9 months in September, the lowest level since December 1998. That means it would take 3.9 months to exhaust the stock of unsold homes at the September pace.

Carliner predicts that for the year, new-home sales will be high but probably would fall just short of 1999 levels.